Labour Cost Accounting

LAbour Cost Accounting
B Produced 450 units (above standard)
Therefore high Piece rate of Rs. 240 applicable
(b) Merrick Differential Piece Rate System
}
= 450 x 2.40
Rs.I080
This is also termed as Multiple Piece Rate system. This plan is 'designed to overcome the drawback
of Taylor's Differential Piece Rate System. Under this method, three piece rates are applied with different
levels of performance. Accordingly
Performance
(1) Less than 83%
(2) From 83% to 100%
(3) More than 100%
Differential Piece Rate
Normal Piece Rate (or) Basic Piece Rate
110% of Normal Piece Rate
120% of Normal Piece Rate
389
Illustration: 2
From the following particulars calculate the total earning of the three workers under Merrick
Differential Piece Rate System.
Solution:
Normal rate per hour Rs. 5 per unit
Standard production per hour 10 units
In an 8 hours a day:
A produced 70 units.
B produced 90 units.
C produced 65 units.
D produced IlO units.
Standard output per day
Piece rate
Level Performance:
A produced = 70 units
10 units x 8 hours
= 80 units
= Rs.5 per units
A's level of performance
Actual Output
=
Standard Output
x 100
70
= x 100 = 87.5 %
80
90
B's level of performance = x 100 = 112.5 %
80
65
C's level of performance = x 100 = 81.25 %
80
IlO
D's level of performance = x 100 = 137.5 %
80